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How does the insurance claims process work?

The claims process usually proceeds in predictable steps. Before you file a claim, you will notify people who may be responsible for the accident that you've been hurt and intend to file a claim for your injuries. This increases your chances of getting a quick settlement and prevents others from later saying that your claim unfairly surprised them.

Next, after you've taken time to thoroughly investigate your claim by gathering evidence, establishing who's responsible for the accident, determining what you believe your claim is worth, and planning good arguments, you will write a formal demand letter and submit it to the insurance company of the person who you believe is responsible for your injuries. (This may include your own insurance company -- for example, if you are covered by a no-fault automobile policy or need to make a claim for uninsured or underinsured motorist coverage.) From there, you will engage in informal negotiations with the insurance company until you agree on a settlement you can live with.

Most insurance claims are that simple, though sometimes you may find yourself dealing with a stubborn or unreasonable claims adjuster. If that's the case, you must resort to more determined negotiation tactics -- or perhaps consult an experienced personal injury lawyer. If all else fails, you may even have to take your case to court.

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What guidelines should I follow when another person's insurance company calls me to talk about my injuries?

After you notify others that you've been hurt in an accident and intend to file an injury claim, you may receive phone calls from one or more insurance companies that want to talk to you about what happened. In these first conversations -- which will most likely occur before you file your claim for compensation (called a "demand letter") [Link to next question] -- you should abide by the following principles:

• remain calm and polite
• identify the person you're speaking with, the company he or she represents and the person who is insured
• give limited personal information (your name, address and phone number is sufficient)
• do not give details about the accident or your injuries
• resist any push to settle your claim immediately
• set limits on further phone contact, and
• take notes about any important information you received during the phone call, as well as whatever information you gave to or requests you made of the insurance adjuster.

Remembering these important rues will help you maintain your chances of receiving a good settlement for your injury claim.

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How do I make a formal claim for compensation for my injuries?

After you decide which insurance company (or companies) should pay for your injuries, and you gather all the evidence you need to establish your claim, you must send the insurance company a demand letter. This letter is a critical element of your claim negotiation process, so it is essential that you write it carefully and well. In your demand letter, you set out your strongest arguments concerning:

• why the insured person is legally responsible for your injuries
• what your injuries were and are
• what kind of medical treatment you've had and how much it cost
• what your income loss was
• what other damages you suffered, and
• if you have no-fault automobile insurance, why you qualify to make a claim against the insured person.

Your letter should conclude with a demand on the insurance company for a lump sum to settle your entire claim. This sum should be a good deal higher than what you're actually willing to settle for; it simply gives you a good place from which to begin negotiations.

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How do insurance companies decide how much they'll pay to compensate someone for an injury?

While the final payment figure depends on negotiations with the injured person, insurance companies and lawyers do use a formula to calculate a range of compensation for an injury. In general, if you've been injured you can expect to be reimbursed for:

• medical care
• lost income
• temporary and permanent pain and other physical discomfort, and
• loss of family, social and educational experiences.

In calculating the range of compensation, a claims adjuster begins with the medical expenses. Then the intangibles -- pain and other no economic losses -- are added in by multiplying the medical expenses by 1.5 to 2 times if the injuries are relatively minor, and up to 5 times if the injuries are more significant. The multiplier can go still higher -- sometimes as much as 10 times medical expenses -- if the injuries are particularly painful, serious or long-lasting. Finally, lost income is added to that amount.

You, too, can easily use this formula as the starting point for negotiations. Once the insurance adjuster knows that you understand the range of compensation for your injuries, negotiating a final settlement is usually quicker and easier.

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Will my health insurance coverage or paid sick leave from work limit my compensation for an accident?

Whether you paid for medical care out of your own pocket or your health insurance covered it is none of a claims adjuster's business. The same goes for whether your lost time at work was covered by sick leave or vacation pay. In fact, it is improper for an adjuster even to ask about such payments. You paid for your health insurance and earned your sick leave or vacation pay; now the insurance for the person who caused the accident has to pay.

Your own health insurance, however, may require that, out of your settlement, you reimburse it for some or all of the amounts it has paid to treat your injuries.

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